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Innovation and New Product Development Case Study

Low Cost Car: Can 'Nano' Gain the First Mover Advantage?

Publication Year : 2010

Authors: S Paul and I Chakraborty

Industry: Automobiles

Region:India

Case Code: IPD0121IRC

Teaching Note: Not Available

Structured Assignment: Not Available

OR

Abstract: In Tata Motors Limited, one of the leading automakers in India, unveiled Nano, the world's cheapest car to date, in January 2008. Ratan Tata, the Chairman of the Tata Group, conceptualised Nano as a solution to the need for a safe and comfortable personal mode of transport for the Indian middle class. Along with the metros, Nano targeted the semi-urban and rural markets, which had a poor public mode of transport. Tata Motors was optimistic that Nano would appeal to the youth and women because of its affordability and safety. However, some analysts were sceptical about its success at such a low price. They predicted that it needed to be sold in huge numbers to make a profit. Besides, some people felt that the car compromised on quality because of its cost constraint. However, the company was highly optimistic about Nano's success, as it claimed that Nano was a complete car within an affordable price. Whether or not Nano would be able to sustain the initial hype and become a successful venture remained to be seen.

Pedagogical Objectives:

To get an insight into the growth and evolution of the Tata Motors corporation as a leading manufacturer of cars.